Lombard leaves Starbucks
Coffee chain focuses on books, music downloads
By Susanne Ault -- Video Business, 4/24/2008
APRIL 24 | Starbucks Entertainment president Ken Lombard, who oversaw the launch of DVD sales at the coffee chain, has exited the post as part of a company-wide restructuring to focus on digital music and books.
Chris Bruzzo, Starbucks’ chief technology officer, has been promoted to senior VP and is charged with leading the company’s slimmed down entertainment category. Lombard left to pursue other opportunities, according to Starbucks.
Under Bruzzo, Starbucks’ entertainment unit will be trimmed to what CEO Howard Schultz dubs the “Core Content” area of music downloads and books. Going forward, there will be fewer product SKUs, as merchandise will be limited to this “Core” strategy. After recently reporting falling sales in its 2008 fiscal second quarter, the chain is looking to shave costs in this slowing economy.
The revamped Starbucks entertainment business will be geared toward such digital initiatives as its ongoing song download program with iTunes. LCD screens promoting music tracks also are expected to expand to new stores.
Additionally, Starbucks and partner William Morris Agency will continue to identify books that Starbucks can cross-promote in stores with its coffee merchandise.
Day-to-day management of Starbucks’ Hear Music Record Label will now be handled by the Concord Music Group.
During Lombard’s tenure, studios welcomed Starbucks’ decision to sell select DVDs along with its varied CD titles. Lionsgate’s 2006 release Akeelah and the Bee kicked off Starbuck’s feature DVD category, and was followed by Warner Home Video’s Happy Feet and Paramount Home Entertainment’s Arctic Tale.
Although actual DVD sales were slight at Starbucks, when compared to dominant mass merchant business, the coffee chain’s high-profile brand was deemed a valuable stamp of approval on movies.
“Although it is painful, we are revisiting and refining certain business strategies that are not directly related to our core,” said Schultz in a memo to his employees. “Therefore, we have decided this is the appropriate time to restructure the entertainment business.”
This corporate shake-up is the latest in a long list of changes Starbucks has launched to improve business. To combat the slowing economy, Starbucks also has rolled out cheaper coffee offerings and retrained baristas to strengthen operations.
Schultz said he was pleased with what Lombard has accomplished with the company.
“Ken was instrumental in shaping Starbucks entertainment strategy over the past several years, and we are grateful for his numerous contributions to the company,” Schultz said.
Starbucks management also believes they are in good hands with Bruzzo.
“Under Chris’ leadership, we will focus on providing customers with a superior ‘Starbucks Experience,’ while building on our legacy of innovation through our redefined entertainment strategy,” said Martin Coles, the company’s chief operating officer.
